Sales Slide, Prices Rise
Some of the buyers we are working with are skeptical of the higher interest rate environment. And they are not alone. This month the Federal Reserve approved it’s fourth-consecutive three-quarter point interest rate increase. This move marks the most aggressive interest rate hikes since the early 1980s. The increased cost of borrowing has sidelined many buyers; however, those still in the market will be pleasantly surprised with their ability to negotiate with sellers compared to the last few years of intense competition.
Here's what we are seeing.
Home Prices are Up
Despite increased interest rates, home prices are still up compared to last year. This is true for both single-family homes and condos, which rose 5% and 4% respectively. The median price for a single-family home in October 2022 was $1.05M and $520K for condos.
The largest number of single-family home sales occurred with homes in the range of $800k to $1M. Meanwhile, properties priced $2 million and above saw a sharp 63% drop compared to last year. Home prices continue to rise largely due to an imbalance of housing supply and demand. While rising rates have significantly cut buyer’s demand, supply is still historically low.
Less Sellers are Selling, But Homes are on the Market Longer
The numbers last month demonstrated seller’s hesitation to put their homes on the market. New listings for single-family homes were down 24% compared to this time last year. However, the overall amount of active inventory rose as the time it took homes to sell almost doubled from last year (from 10 days on market to 19 days on market). While doubling the days on market could be considered a “dramatic” increase, keep in mind that 19 days on market to sell is still incredibly fast! In fact, it is 4 days faster than the median days of market from this time in 2019.
Overall, Home Sales are Down
As you’ve probably gathered, the most prominent storyline continues to be rising interest rates. The Fed’s actions are successfully having a dampening effect on buyer demand. The evidence? Closed sales for single-family homes dropped 42% vs last year. Meanwhile, condo sales fell by 29%. If you’re in the market, you will likely face less bidding wars as 50% of homes sold under their original asking price.
Ultimately, it’s still a good time to sell but sellers are beginning to feel to squeeze to get their homes on the market quickly as the market cools. For buyers, the cost of borrowing will remain a challenge but they can breathe a sigh of relief knowing that the incredible competition for each listing is waning. The market dynamics are shifting, your strategy should too. Have further questions? Schedule some time with us.